# Dividends on preferred and common stock Yukon Bike Corp. manufactures mountain bikes and distributes them through retail outlets in Canada, Montana, Idaho, Oregon, and Washington. Yukon Bike Corp. declared the following annual dividends over a six-year period ending December 31 of each year: Year 1, \$28,000; Year 2, \$44,000; Year 3, \$48,000; Year 4, \$60,000; Year 5, \$76,000; and Year 6, \$140,000. During the entire period, the outstanding stock of the company was composed of 40,000 shares of 2% preferred stock, \$65 par, and 50,000 shares of common stock, \$1 par. Instructions Assuming that the preferred slock was sold at \$57.50 and common stock was sold at \$5.00 at the beginning of the six-year period, calculate the average annual percentage return on initial shareholders' investment, based on the average annual dividend per share (a) for preferred stock and (I)) for common stock.

### Survey of Accounting (Accounting I)

8th Edition
Carl Warren
Publisher: Cengage Learning
ISBN: 9781305961883

### Survey of Accounting (Accounting I)

8th Edition
Carl Warren
Publisher: Cengage Learning
ISBN: 9781305961883

#### Solutions

Chapter
Section
Chapter 8, Problem 8.5.3P
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